South Africa’s economy expanded at its fastest pace in 14 years in 2021, rebounding from a coronavirus-induced contraction the year before.
Gross domestic product grew 4.9%, after shrinking 6.4% in 2020, according to a report released by Statistics South Africa Tuesday in the capital, Pretoria. The biggest increase since 2007, the expansion beat the 4.8% median estimate of 29 economists in a Bloomberg survey, as well as the National Treasury’s forecast in its annual budget last month.
GDP expanded 1.2% in the three months through December from the previous quarter, following a revised 1.7% contraction in the prior three months. The growth rate matched the median estimate of 14 economists in a separate Bloomberg survey. GDP grew 1.7% year-on-year in the fourth quarter.
Growth in the fourth quarter was crimped by a contraction in the mining industry, in part due to port delays, and excessive rain in December that stymied output. While the faster rebound in the 2021 number bodes well for South Africa’s return to pre-Covid-19 levels of economic output this year and the government’s efforts to rein in high debt, the war in Ukraine is likely to curtail growth going forward.
The upside risks to inflation stemming from the war, rather than the growth data, is likely to be the main focus of the South African Reserve Bank’s monetary policy committee when it meets in two weeks to decide on interest-rates, said Carmen Nel, an economist and strategist at Matrix Fund Managers.
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